Skip to main content
Sister Publication Links
  • Sustainable Plastics
  • Plastics News China
  • Rubber & Plastics News
logo-pn-color
Subscribe
  • Login
  • Register
  • Subscribe
  • News
    • Processor News
    • Suppliers
    • More News
    • End Markets
    • FYI Charts
    • LSR World
    • Multimedia
    • NPE2021
    • K Show
    • Special Reports
    • Top materials of injection molders
      Recycled PET use by product category
      US PET, flexible packaging desintations
      Global fluropolymers additives market: CAGR
    • NPE exhibitors question handling of deposits for canceled trade show
      Exhibitors back NPE cancellation: ‘We couldn't take that risk'
      NPE2021 canceled as in-person event
      NPE reviews its options as pandemic prompts exhibitor to exit
    • Injection Molding
    • Blow Molding
    • Film & Sheet
    • Pipe/Profile/Tubing
    • Rotomolding
    • Thermoforming
    • Recycling
    • Machinery
    • Materials
    • Molds/Tooling
    • Product news
    • Design
    • What Keeps You Up At Night
    • Mergers & Acquisitions
    • Sustainability
    • Public Policy
    • Material Insights Videos
    • Numbers that Matter
    • Polymer Points Live
    • Automotive
    • Packaging
    • Medical
    • Consumer Products
    • Construction
    • Videos
    • Galleries
    • Podcasts
    • CEO Issue
    • Best Places to Work
    • Processor of the Year
    • Rising Stars
    • Women Breaking the Mold
  • Opinion
    • The Plastics Blog
    • Kickstart
    • Heavy Metal
    • One Good Resin
    • BRICS and Plastics
    • All Things Data
    • Viewpoint
    • Perspective
    • Mailbag
    • Getting back on the road
      How long will it take for EVs to replace internal combustion engines?
      Watching, and hoping, for progress in 2021
      COVID-19 stories dominate 2020 headlines
    • Kickstart: Microchips, masks and US manufacturing
      Kickstart: Bringing plastics, sustainability to the construction site
      Kickstart: Making more US beds
      Kickstart: Katherine Johnson, Perseverance, plastics and space
    • Heavy Metal: Coronavirus edition, plus the work of working from home
      Don't put off succession planning
      What's a good gift for your cobot? Batteries?
      Here's some big ideas to mull over the holidays
    • Green feet: Braskem partners with Dansko on bio-based clogs
      Curbell donates plastic sheet for prosthetics project in Ecuador
      Covestro volunteers build ramp for Ohio veteran
      Chase expands giving campaign in 2020
    • There was no choice but canceling NPE still a big deal
      The business case for producer responsibility
      Think divided government stalls plastics legislation? Think again
      ACC, NAM eye economic priorities in Biden presidency
    • Thermoformers: Would you believe a 12 percent gain?
      Just how big is thermoforming in North America?
      Changing names for compounders embracing corporate branding
      Diversity the key to outperforming the market
    • Thermoformers: Would you believe a 12 percent gain?
      The benefits of getting social
      Rising Stars shine bright future on industry
      Getting back on the road
    • Perspective: Plastics manufacturers — a surprising contribution to sustainability
      Plastics industry business owners: Listen to your future workforce
      Perspective: ‘Fake news' of a different sort?
      Perspective: Making products in the USA is good for the planet
    • Mailbag: Additional fees for electric vehicles ‘unfortunate'
      Mailbag: Where's the plastics industry's response to critics?
      Mailbag: Manufacturers struggling to follow COVID-19 safety rules
      Modernizing recycling infrastructure will benefit businesses as well as the environment
  • Shop Floor
    • Blending
    • Compounding
    • Drying
    • Injection Molding
    • Purging
    • Robotics
    • Size Reduction
    • Structural Foam
    • Tooling
    • Training
    • Maintenance can ensure efficient blender operation
      Dosing: Perfect for adding color
      Blending vs dosing: What you need to know
      Going low or high: Comparing volume
    • Colors and custom compounds
      In the laboratory: Compounding solutions
      Recycling content: Resins going ‘green’
      Compounding: Glass and other fillers
    • Dryer maintenance: Don’t err with air
      Dryers: Options for a shop’s process
      Dryer installation: Going central?
      Resins: Hygroscopic or non-hygroscopic
    • Electric injection molding presses: Efficiency is key
      Hydraulic injection molding machines
      Proper maintenance can prevent downtime
      Hybrid injection molding machines
    • Purging Hot runners: Open or closed methods
      Purging extrusion machinery
      Purging extrusion blow molding machines
      Purging: Chemical, abrasive and non-abrasive
    • Controls, special applications boost production, profitability
      Robot maintenance key for smooth operation
      High-speed robots: A rapid way to increase efficiency
      Robots: Every shape and size
    • Maintenance: Key for efficiency
      Shredders: Plastic in pieces
      Safety first for size reduction
      Granulators: The right fit
    • Video: Structural foam molding
      Structural foam molding: Flexibility for processors
    • Mold inventory: How many molds does a shop have?
      Molds: Innovation
      Mold changeover: Saving time and money
      How molds work
    • Labor: Apprenticeships may provide answer
      Internships: Solving the skills gap in-house
      College training, programs
      Lean Six Sigma: Transforming business operation
  • Events
    • Plastics News Events
    • Industry Events
    • Livestreams/Webinars
    • Ask the Expert
    • Polymer Points Live
    • Reifenhäuser Technologies Livestreams
    • 2020 Caps & Closures Library
    • Plastics in Healthcare Library
    • Women Breaking the Mold Networking Forum Library
    • Polymer Points Live - February 2021
      Polymer Points Live - January 2021
      Polymer Points Live - December 2020
      Polymer Points Live - October 2020
    • Plastics in Healthcare 2020
    • Plastics News Executive Forum
    • Plastics in Automotive
    • Plastics News Caps & Closures
    • Plastics in Healthcare
    • Women Breaking the Mold Networking Forum
  • Resin Prices
    • All Resins
    • Commodity TPs
    • High Temp TPs
    • ETPs
    • Thermosets
    • Recycled Plastics
    • Historic Commodity Thermoplastics
    • Historic High Temp Thermoplastics
    • Historic Engineering Thermoplastics
    • Historic Thermosets
    • Historic Recycled Plastics
  • Rankings
    • Injection Molders
    • Blow Molders
    • Film Sheet
    • Thermoformers
    • Pipe Profile Tubing
    • Rotomolders
    • Mold/Toolmakers
    • LSR Processors
    • Recyclers
    • Compounders - List
    • Association - List
    • Plastic Lumber - List
    • All
  • Data Store
  • Directory
  • More+
    • Classifieds
    • Digital Edition
    • Newsletters
    • Sponsored Content
    • White Papers
    • Processor of the Year submissions
    • Sponsored By Mitsubishi
      Innovative new technology from Mitsubishi Engineering-Plastics Corporation helps reduce emission footprints
      Canon Virginia, Inc.
      Sponsored Content By Canon Virginia, Inc.
      Canon Virginia Inc. brings collaboration to the table
      Sponsored By CDS MACHINES
      Facing medical equipment shortages during COVID-19 outbreak?
      Sponsored Content By Canon Virginia, Inc.
      Transform your molding capabilities with the Canon Shuttle Mold System
    • Sponsored By Conexiom
      Use Sales Order Automation to free up time for CSRs to focus on customers, not manual entry
    • Place an Ad
    • Sign up for Early Classified
MENU
Breadcrumb
  1. Home
  2. News
September 13, 2019 09:00 AM

SmileDirect's billion-dollar-plus IPO features founders with deep metro Detroit roots

Annalise Frank
Crain's Detroit Business
  • Tweet
  • Share
  • Share
  • Email
  • More
    Print
    SmileDirectClub

    A startup with deep metro Detroit roots, SmileDirectClub Inc. went public Thursday.

    A startup with deep metro Detroit roots went public Thursday in one of the biggest initial public offerings of the year.

    SmileDirectClub Inc., a Nashville-based at-home teeth aligner startup, will raise more than $1.3 billion from the IPO, which set a $23-per-share price Wednesday evening, according to Bloomberg News. That made it the sixth-biggest IPO of the year.

    However, the stock opened with a thud. Shares tumbled nearly 29 percent to close at $16.44 in their Nasdaq debut after the company’s IPO was priced above its initial target range of $19-$22. That made it the first U.S. company since at least 2008 to raise more than $1 billion and price its IPO above range, yet sink in its opening trades, Bloomberg reported.

    SmileDirectClub launched in 2014 with financial backer Camelot Venture Group, a Farmington Hills-based investment firm founded and co-owned by David Katzman, father of one of the SmileDirectClub founders and a former Dan Gilbert business partner. Katzman is also CEO of SmileDirectClub.

    Co-founders Alex Fenkell and Jordan Katzman, both 30, are childhood friends who met at a northern Michigan summer camp when they were teens.Fenkell is from Bloomfield Hills and attended Cranbrook, while Katzman of Franklin attended Birmingham Groves High School. They partnered with Jordan's father, David, and his Camelot firm that has invested in Quicken Loans Inc. and 1-800 CONTACTS, among others.

    SmileDirectClub sold 58.5 million shares of Class A common stock, according to a Securities and Exchange Commission filing.

    The company, which dubs itself as disrupting the orthodontics industry, started trading Thursday. It is listed on the NASDAQ Global Select Market in New York under the symbol SDC.

     

    Katzman, Fenkell and Jordan Katzman rang the NASDAQ opening bell Thursday morning and NBA star Draymond Green, an investor, was scheduled to participate in promotional activities in New York City. SmileDirectClub flooded Times Square with advertisements to celebrate the IPO.

    The company was valued at $3.2 billion as part of a funding round last fall. The IPO price values it as a public company at around $8.9 billion, Crunchbase.com reported. David Katzman will retain control of the company after the IPO through a separate class of stock with special voting powers, according to federal filings.

    "We're still a young company, but our IPO is a key milestone to help us continue to grow and keep our rocket ship soaring," Fenkell said in an emailed statement.

     

    Though SmileDirectClub moved its headquarters to Nashville in 2016, Katzman remains in metro Detroit while Fenkell spends most of his time at the company headquarters with frequent visits back home.

    Why Nashville? Fenkell notes the city is a hub for the health care industry and calls the vibrant and growing city an attraction for talent.

    "Known as the health care capital of the southeast, we felt the synergies between Nashville's rich history and our innovative business model worked well," he said in a statement.

    David Katzman is a former Quicken Loans vice chairman and Gilbert's cousin. Gilbert, the billionaire, Quicken Loans founder and Detroit real estate mogul, is a former partner in Camelot with Katzman — they invested together in graphics company Fathead LLC, among others.

    Katzman was also part of Gilbert's investment group that bought the Cleveland Cavaliers for $375 million in 2005. Katzman reportedly had a falling out with Gilbert and sold his stake in the team, Crain's reported.

    In 2008, partners in the investment firm transitioned from Camelot Ventures to a new entity called Camelot Venture Group that kept investments made as part of the previous company.

    Smile-makers

    SmileDirectClub is expanding, while its losses are growing: It reports a 190 percent increase in revenue from $146 million 2017 to last year's $423.2 million; it saw net losses of $74.8 million last year, rising from $32.8 million in 2017, according to the SEC filing.

    The company says it has had more than 700,000 customers. It employs 5,000 total, with more than 100 in Michigan. It operates 300 brick-and-mortar SmileShops, including 11 in Michigan.

    And more are coming: SmileDirectClub launched in the U.K. and Australia this year. Plus, CVS Health announced in April it had partnered with SmileDirectClub and plans to open SmileShops in "hundreds" of its pharmacies this year, more than doubling the SmileShop footprint.

    How does the smile-straightening work? After customers make impressions of their teeth from their home or at a SmileDirectClub shop, they are mailed a box with a series of custom, clear aligners that shift teeth in five to 10 months.

    It's billed as a lower-cost, remote way to get straight teeth. SmileDirectClub says its at-home plan costs up to 60 percent less than traditional methods. It says traditional fixes cost $5,000-$8,000 or more, while it charges $1,895. It also has an $85-per-month option for a total of $2,290.

    The company says it works with 225 dentists and orthodontists who build customers' alignment plans based on photos and medical history.

    But the traditional orthodontist industry is opposed to customers going through the medical procedure without in-person supervision from a dental professional. The main orthodontists' trade association has filed complaints against SmileDirectClub with 36 state dental boards and attorneys general alleging regulatory and statutory violations, Bloomberg reported in October.

    New funding

    SmileDirectClub raised $380 million in a funding round last fall that valued the company at $3.2 billion, Bloomberg reported. Private equity investor Clayton, Dubilier & Rice, with main offices in New York and London, led the financing round. It was joined by Kleiner Perkins and Spark Capital. Clayton partner Rick Schnall joined the orthodontics startup's board of directors.

    The company said at the time it would use the funding for research and development, and international expansion. Before the fall round, most of its funding came from Camelot, though it has other minority investors.

    Daniel Sillman, a Birmingham native and childhood friend of the founders, invested in SmileDirectClub with business partner Green, the Saginaw native and Golden State Warriors and Michigan State University basketball star.

     

    "When I was presented with the opportunity to invest, it was a no-brainer for me, you know, obviously, having someone like David Katzman, who's a genius in building direct-to-consumer business," Green said, adding that he sees a growing international market for the lower-cost teeth straightening option.

    Sillman — CEO of Relevent Sports Group, owned by billionaire real estate developer and Detroit native Stephen Ross — called the IPO a "moment of validation."

    "There's a lot of institutional investors who have wanted to invest in SmileDirect for a long time, but haven't had access, so a lot of institutional capital wanting to invest in them in market … that'll really put a tailwind behind them in the IPO," he said.

    Sillman and Green invested in 2016. Before that, Green said, he used the startup's aligners to fix his bottom row of teeth after he lost his retainers, his teeth moved and he felt self-conscious about how they looked for years.

    "I think the best experience, knowledge, you can get from a specific product is to use it yourself," he said. "I'm a happy customer."

     

    Align Technologies, which makes another invisible aligner brand, Invisalign, was supplier for and had a 17 percent stake in SmileDirectClub, according to Camelot. But it sold back its shares over a lawsuit regarding breach of a noncompete clause in its contract, Forbes reported.

    Letter
    to the
    Editor

    Do you have an opinion about this story? Do you have some thoughts you'd like to share with our readers? Plastics News would love to hear from you. Email your letter to Editor at [email protected]

    Get our newsletters

    Staying current is easy with Plastics News delivered straight to your inbox, free of charge.

    Subscribe today

    Subscribe to Plastics News

    Subscribe now
    Connect with Us
    • LinkedIn
    • Facebook
    • Twitter
    • Instagram

    Plastics News covers the business of the global plastics industry. We report news, gather data and deliver timely information that provides our readers with a competitive advantage.

    logo-pn-color
    Contact Us

    1155 Gratiot Avenue
    Detroit MI 48207-2997

    Customer Service:
    877-320-1723

    Resources
    • About
    • Staff
    • Editorial Calendar
    • Media Kit
    • Data Store
    • Digital Edition
    • Custom Content
    • People
    • Contact
    • Careers
    • Sitemap
    Related Crain Publications
    • Sustainable Plastics
    • Rubber & Plastics News
    • Urethanes Technology
    • Plastics News China
    • European Rubber Journal
    • Tire Business
    Legal
    • Terms and Conditions
    • Privacy Policy
    • Privacy Request
    Copyright © 1996-2021. Crain Communications, Inc. All Rights Reserved.
    • News
      • Processor News
        • Injection Molding
        • Blow Molding
        • Film & Sheet
        • Pipe/Profile/Tubing
        • Rotomolding
        • Thermoforming
        • Recycling
      • Suppliers
        • Machinery
        • Materials
        • Molds/Tooling
        • Product news
        • Design
      • More News
        • What Keeps You Up At Night
        • Mergers & Acquisitions
        • Sustainability
        • Public Policy
        • Material Insights Videos
        • Numbers that Matter
        • Polymer Points Live
      • End Markets
        • Automotive
        • Packaging
        • Medical
        • Consumer Products
        • Construction
      • FYI Charts
        • Current FYI
      • LSR World
      • Multimedia
        • Videos
        • Galleries
        • Podcasts
      • NPE2021
      • K Show
      • Special Reports
        • CEO Issue
        • Best Places to Work
        • Processor of the Year
        • Rising Stars
        • Women Breaking the Mold
    • Opinion
      • The Plastics Blog
      • Kickstart
      • Heavy Metal
      • One Good Resin
      • BRICS and Plastics
      • All Things Data
      • Viewpoint
      • Perspective
      • Mailbag
    • Shop Floor
      • Blending
      • Compounding
      • Drying
      • Injection Molding
      • Purging
      • Robotics
      • Size Reduction
      • Structural Foam
      • Tooling
      • Training
    • Events
      • Plastics News Events
        • Plastics News Executive Forum
        • Plastics in Automotive
        • Plastics News Caps & Closures
        • Plastics in Healthcare
        • Women Breaking the Mold Networking Forum
      • Industry Events
      • Livestreams/Webinars
      • Ask the Expert
      • Polymer Points Live
      • Reifenhäuser Technologies Livestreams
      • 2020 Caps & Closures Library
      • Plastics in Healthcare Library
      • Women Breaking the Mold Networking Forum Library
    • Resin Prices
      • All Resins
      • Commodity TPs
        • Historic Commodity Thermoplastics
      • High Temp TPs
        • Historic High Temp Thermoplastics
      • ETPs
        • Historic Engineering Thermoplastics
      • Thermosets
        • Historic Thermosets
      • Recycled Plastics
        • Historic Recycled Plastics
    • Rankings
      • Injection Molders
      • Blow Molders
      • Film Sheet
      • Thermoformers
      • Pipe Profile Tubing
      • Rotomolders
      • Mold/Toolmakers
      • LSR Processors
      • Recyclers
      • Compounders - List
      • Association - List
      • Plastic Lumber - List
      • All
    • Data Store
    • Directory
    • More+
      • Classifieds
        • Place an Ad
        • Sign up for Early Classified
      • Digital Edition
      • Newsletters
      • Sponsored Content
        • ENGEL Sponsored Content
      • White Papers
      • Processor of the Year submissions